Parity's new fame would hearten AAM leaders

Tommy Willis must be smiling. Tommy was a cotton, corn and soybean farmer from Brownsville, Tenn., who served as national president of the American Agriculture Movement Inc. from 1983 until 1985. (He died in 1992.) Those who followed the AAM know the group's key word was “parity” or bringing commodity prices or loan rates into line with the price targets in the Agriculture Adjustment Act of 1938 and the Agriculture Act of 1949.

Born in the late 1970s protests that saw farmers driving tractors up Washington's Pennsylvania Avenue, the AAM tried for years to persuade Congress to set loan rates as a percentage of parity, a formula that gives a unit of a commodity the same purchasing power it had in 1910-1914.

They never succeeded, primarily because economists argued setting loan rates at 70 percent of parity (which the AAM favored and would raise the cotton loan rate from 52 cents to 92 cents today) would price most U.S. commodities out of world markets.

That's why Tommy Willis would have found the comments by House Agriculture Committee Chairman Collin Peterson ironic. If the White House continued to threaten a veto of the 2008 farm bill, Peterson, D-Minn., said, he might let farm programs revert to permanent law (1938 and 1949 acts).

(Since the 1940s, the agriculture committees have made new farm bill amendments to the 1938 law to provide leverage in case the White House or Congress balked at enacting new legislation.)

This time, higher loan rates would not be problematic, Peterson says, because market prices are high for every crop except cotton. The wheat loan rate, for example, would be set at $8.32 per bushel or about 60 cents below Chicago July futures.

Peterson said Acting Agriculture Secretary Chuck Conner thinks he's bluffing. “Absent a bill and an extension, we don't need to do anything to have permanent law,” he noted. “That would be easier than having to do something.”

Conner's repeated bashing of the farm bill's “raising taxes and being fiscally irresponsible” is clearly getting on Peterson's nerves. Conner and USDA undersecretaries have gone all over telling anyone who listens that Congress passed a bad farm bill.

“What gets me is we passed the war supplemental without pay-as-you-go, we pass the Alternative Minimum Tax legislation without pay-go and now, apparently, we'll spend $150 billion on a so-called economic stimulus package without pay-go,” he said.

“Yet they want to undermine agriculture, the one part of the economy doing well by getting in a dispute over $10 billion. Meanwhile, we've added $300 billion to the deficit because of the war in Iraq in recent months. That makes no sense to me.”

Years ago, then House Ag Committee Chairman Kika de la Garza, a favorite of the AAM, would criticize the administration for spending $10 billion on a submarine that would be obsolete in five years and never feed anybody.